Medical marijuana producer Aurora Cannabis has struck a $2.5-billion (C$3.2bn) deal to buy rival MedReleaf, a move that will give the Canadian group a larger production footprint as it plots its expansion at a time when more governments around the globe are legalizing recreational pot use.
The all-stock deal valued shares of MedReleaf at roughly C$29.44, an 18 per cent premium to the company’s closing stock price on Friday. Aurora will own 61 per cent of the combined company, with shareholders of MedReleaf holding the remaining stake.
“Our complementary assets, strategic synergies, and strong market positioning will provide us with critical mass and an excellent product portfolio in preparation for the adult consumer use market in Canada,” said Terry Booth, chief executive of Aurora. “Equally, the combination strengthens our capacity to service the rapidly expanding global medical cannabis markets.”
Aurora, which said the deal would give it production capacity of 570,000 kilograms of marijuana a year, has been on a buying frenzy ahead of the legalization of recreational marijuana in Canada in July. Medical cannabis has been legal since 2013.
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